AUDUSD

09:23, 25 January

Drops Below Key 0.7150 Level Despite Unemployment Drop

In the last week or so the AUDUSD has slowly but surely eased lower, and whilst it received some support from the key 0.7150 level for a few days, it has continued lower to a three week low back within the range between 0.7050 and 0.7150. Just prior to the decline, the AUDUSD had done very well to rally from its lowest level in many years below 0.67 up to a five week high a couple of weeks ago. 

You would have expected the support at 0.7150 to stay strong for longer, however it has since moved lower showing how strong the sellers are presently.  The AUDUSD didn’t finish 2018 very well falling strongly throughout December to hit a three year low just below 0.7050 before dropping sharply down to below 0.67 and regaining lost ground just as quickly as it fell.

In mid-December the AUDUSD enjoyed some much needed support from the 0.7150, after this level played a role in the last couple of months with the currency pair bouncing off this level several times, however this level gave way to immense selling pressure which saw the AUDUSD fall from near 0.74 to its multi year low.

Throughout November the 0.73 level provided a lot of resistance to the AUDUSD so it will be interesting to see how the AUDUSD responds should it continue its rally higher. Leading up to the four month high near 0.74 at the end of November, the AUDUSD had made some solid ground over a few weeks reversing from support at 0.7050 and moving higher. Just prior to this push higher the AUDUSD had been quite content to take a breather and enjoy solid support from 0.7050 as it has traded along that level for several weeks throughout October, although it did drop a little lower reaching a then 2½ year low during that time.

Despite concerns about a global growth slowdown which includes Australia, the Australian job data has surprised with the unemployment rate easing to 5% in December.21,600 new jobs were created which was better than all expectations, however the majority of these additions were part-time positions with 3,000 full-time jobs being lost over the month.  By historical standards, participation rates still remain high however the unemployment rate was helped by a minor reduction in the number of people looking for work.Interestingly, the data seems to contradict other economic indicators, for example inflation, growth or house prices.Many would expect employment growth to ease this year given the softer economic conditions, including falling property prices.  The unemployment data is the equal lowest level of unemployment since June 2011, in seasonally adjusted terms.  "Over the past year, trend employment increased by 284,100 persons [2.3 per cent], which was above the average annual growth over the past 20 years [2 per cent]," the Australian Bureau of Statistics release noted.  The state of Victoria now leads the nation in terms of the lowest seasonally adjusted unemployment rate at 4.2 per cent, slipping past New South Wales, which held steady at 4.3 per cent.